Expanding a family is a momentous decision for couples – not just emotionally but also financially. Yes, the decision to bring a new life into the world is an expensive one, as the cost of raising a child has kept pace with the rising prices of housing and necessities in Australia. The only thing not to have increased commensurately, unfortunately, is the paycheque – with the annual wage growth reported to be 1.9 percent earlier this year, the lowest since the late 90s.

Growing a Family - Mortgage

The cost of raising a child in Australia

According to a report published in 2013, the cost of bringing up two kids in a typical middle-income family has almost doubled from 2002.

On average, a low-income family spends $320 per week on children while the average government benefit received is $274 per week. In comparison, middle-income families spend much more on their children, with a net cost of $375 per week and a lifelong cost of $449,513. A high-income family spends $734 per week, or $878,862 in total, and receives, on average, just $1 per week in assistance.

By taking all income groups into account, the report reveals that the average cost of raising a child in Australia is a staggering $488 per week. The government eases the burden marginally by chipping in $111 per week. You might find it interesting that while the cost of welcoming a new child is substantial, families tend to spend more on older children, with low-income and middle-income families spending up to 42 and 30 percent of their incomes, respectively, on children aged 18-24.

Time for the pill?

Indeed, the staggering costs of raising a child could well put off several couples from planning a family, especially in the wake of rising house prices and other expenses. However, with some foresight and thoughtful financial planning, you can plan a family without feeling the financial pinch. “It is all about being smart with your finances,” says Linda, a HashChing mortgage broker. By making structured savings, you can enjoy raising a family without going through financial strain. Here’s how to get started:

Count your expenses – By minutely cataloguing all your incomings and outgoings, you can get the real picture of how you spend your money. By tracking your expenses, you will realise how much money trickles out of the household on wasteful expenditure such as buying an extra item on sale or a couple of drinks at the bar. Once you understand your real needs and wants, create a household budget that focuses on needs, minimising the wants, and see the difference in your savings.

Plan your savings – As you’d never board a train without a destination in mind, it also makes more sense to save for a target than aimlessly stowing away whatever you can each month. Of course, it is great to save as much as possible, but it is advisable to start young, with a goal in mind that will push you to save for it.

In general, childcare constitutes the significant chunk of expenses for most parents, with private schooling and daycare costs touching a few hundred dollars per week in some of the suburbs. On average, parents spend $216 per week on private schooling while Catholic and public schools cost around $81 and $12 per week, respectively. The cost increases as the child grows in age, and parents today need to plan much more than ever, considering 25 percent of people aged 20 to 34 continue to live in their parental home in Australia.

(Be it your child’s education or the deposit for your home, use this savings calculator to plan your finances better.)

Recycle and Reuse – Parents often receive gifts for their new born as well as buy a plethora of items that the child quickly outgrows. It only makes sense to put these items aside once the child stops using them, to repurpose them for subsequent children, saving some precious bucks. Be it toys, a crib or a cot or onesies for the little one; you can always personalise these items for your second born with some creativity at barely any cost.

Take stock on your health insurance – Everyone understands that it is essential to take out health insurance to keep any unplanned medical expenses at bay. Especially when you are planning a family, it is even more important to have yourself adequately covered. But did you know you could get more bang for your buck by reviewing and comparing insurance policies online?

Thanks to the increasing competition, insurers are offering lucrative discounts and premium-free periods to attract new members, which means, you can save hundreds if you are ready to switch your policy each year. You can always speak with an insurance expert to understand your options in detail.

You can also save more by prepaying your premium before the first of April each year. Many insurers offer discounts on prepayment, and you also avoid any hikes in the premium for the next twelve months.

While you are at it, Linda suggests that you also take a life cover. “Being young, it might seem like a waste of money, but a life cover, as well as income protection plan, will keep your family protected in case of any hardship,” she explains.

Get a competitive home loan deal – Many people consider raising a child akin to a second mortgage. But you could always save more on your first mortgage, or your home loan, by choosing a more competitive deal. “Start by comparing mortgage rates online,” says Linda, “but remember, cheaper is not the best always. Having essential features, such as an offset account or flexible payment options, could save you much more over the life of your loan than a vanilla mortgage. A mortgage broker will gauge your requirements professionally and introduce you to the best-fit home loans for your situations,” she explains.

As you expand your family, it is only natural that you consider upsizing your home. The equity you have built in your home could come in handy, as you can always refinance to borrow money to build an extra room or renovate the house to suit the requirements of your expanding family. Read more about using the equity in your home here.

Considering the number of lenders in the market offering low interest rate mortgages, experts suggest homeowners must review their home loans every two to three years to ensure they are not paying any more than they should. Often, homeowners continue paying for features they no longer need and can save precious dollars each month by reviewing their home loan regularly and keeping an eye on the market. If you plan to refinance to a lower rate or have a question regarding your mortgage, speak to a mortgage broker online, free of cost. You can review home loan deals from over 60 lenders across Australia, here.


By Vidhu Bajaj,
HashChing Content Writer


HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.